ECONOMY

New Turk IMF loan

ANKARA (AFP) – Turkey and the International Monetary Fund have put the final touches on a new 10-billion-dollar standby program which the IMF is expected to approve next month, officials from both sides said yesterday. «The draft is finalized… The IMF executive board is planned to take up the new standby arrangement in the first half of May,» Economy Minister Ali Babacan told a joint news conference with IMF officials at the end of a week of talks. The IMF mission was in Ankara to put the final touches to and update the draft of the deal, which the two sides had first agreed upon in December. The new three-year program, which will succeed a three-year 16-billion-dollar standby deal that expired in February, aims at consolidating and advancing the reforms that helped the economy emerge from two severe financial crises. «We do believe that the prospects for the Turkish economy are now the best in a generation,» the chief of the IMF’s Turkey desk, Reza Moghadam, said. He hailed the country’s remarkable growth of 9.9 percent last year and the fall of inflation to 9.3 percent, Turkey’s lowest inflation rate in three decades. «But of course there are remaining challenges,» Moghadam said, pointing at the country’s hefty debt, high unemployment and interest rates, and regional economic disparities. The IMF has said the new program, if implemented properly, would allow Turkey to forego further financial support from the international lender. Babacan said Ankara had recorded important progress in fulfilling three legislative measures which the IMF has set as a condition for the approval of the new loan. The Turkish Parliament was set to start debating a bill reforming the country’s tax administration later yesterday, and two other bills reforming the troubled social security system and the financial services sector are in line on its agenda, Babacan said. «We will try to pass this legislation as soon as possible,» he said. «With these laws, the Turkish economy will become stronger and much more resilient.» The new program also aims at bringing the Turkish economy closer to the standards of the European Union, which the country is seeking to join. It is based on targets of 5 percent growth each year between 2005 and 2007, and single-digit inflation projected at 8 percent this year, 5 percent in 2006 and 4 percent in 2007. IMF aid has helped Turkey haul its economy out of its worst recession since World War II, triggered by two severe financial crises in 1999 and 2001.